Hong Kong Stock Market Review: The Final Crazy Rally
Hong Kong stocks continued last week's trend, with funds focusing on undervalued stocks, AH shares, and non-banking sectors performing well. The PB ratio of AH brokerage firms has been restored to 1x, while AMC stocks have risen across the board, with the market anticipating the appreciation of distressed assets. Tomorrow, AH shares may not experience the same drastic fluctuations as when SMIC returned to the A-share market. A press conference will be held domestically at 10 a.m., with expectations that fiscal efforts will improve weak consumer spending. Essential consumer goods such as dairy products are showing signs of recovery, while discretionary consumer goods like automobiles and gambling are benefiting significantly. The market sentiment resembles a flash sale event, and attention should be paid to the return of fundamentals
The Hong Kong stock market continued the momentum from last week, with funds continuing to eliminate undervalued assets. AH shares and non-banking stocks remain the market's darlings.
Currently, most AH securities firms have restored their PB ratios to 1x, preliminarily completing the most aggressive logic of eliminating undervalued assets in a bull market. AMC is also experiencing a comprehensive rise, with the market anticipating junk assets to appreciate several times over.
Looking back at the time when SMIC International returned to the A-share market, its H-shares doubled within a month. However, on the day of its A-share listing, its H-shares plummeted by 25%. Will AH shares repeat this scene tomorrow? It is highly unlikely, given the overly positive market sentiment. However, as mentioned last week, the two markets are different, and discounts will persist in the long term. Mainland funds may continue to flow into non-banking sectors with improving fundamentals.
Furthermore, there will be a press conference in China tomorrow morning at 10 o'clock. As long as fiscal efforts are made, there is a greater chance of breaking out of the downturn in demand, allowing consumption to formally escape its decline.
In terms of consumer categories, essential consumption mainly includes dairy products. For example, Mengniu, which was in its worst situation, has already passed that phase. It has also indicated that there will be no significant capital expenditures in the coming years, with the goal of enhancing free cash flow to return to shareholders.
Among optional consumption categories, those benefiting most from the wealth effect include automobiles and gambling. The former may focus more on alpha, while the latter has relatively low valuations. Previously, some individual stocks had dividend yields of over 3%, which was unimaginable in the past. Macau also showed good performance in tourist data during the National Day holiday.
In any case, the current market sentiment resembles more of a clearance sale, and after excessive expansion, it always returns to fundamentals